675 million bushels of corn may seem like a lot, but that is only an 18 day supply for the US grain market, and that is the reason corn prices pushed above $7 Wednesday on the CME. March corn did not close above that level, but settled at $6.98 per bushel following USDA’s February Supply and Demand report that indicated the ethanol industry was refining corn faster than previously thought.

Corn, beans and wheat prices have all been rising, but so has the price for ethanol. A year ago, ethanol was in the $1.70 per gallon range, but Wednesday closed at $2.457 per gallon, the highest it has been since the early summer price spike in 2008 when it exceeded $2.80 per gallon.

The result of the ethanol industry’s demand for corn tightens down the supply, says University of Missouri marketing specialist Melvin Brees. In his Crop Report Commentary Brees says USDA economists raised corn use by 70 million bushels and 50 million of that was added to ethanol refining. The 745 million bushel ending stocks were lowered to 675 million, and that is 5% of the expected use for the current marketing year. Actually it parallels the tight corn supply of the 1995-96 season and is the least stocks to use ratio in the past 50 years.